New Zealand Qrops provider Super Trustee Fund has written to the New Zealand government calling for it to scrap proposals which it claims could end the country’s Qrops market.
Last month, the NZ ministry for economic development published a draft Financial Markets Conduct Bill.
It contains clauses which would mean that only residents or those working for the state would be able to join New Zealand superannuation schemes and, by extension, any NZ Qrops.
Super Trustee Fund lawyer Michael Reason says the move is an attempt to stop people using NZ Qrops to cash out their pensions and avoid HM Revenue and Customs’ rules, which state that 70 per cent of funds in a Qrops must be used for retirement income.
Reason says preventing all non-residents from getting a pension in New Zealand is an extreme step. He says: “I have been told by several people that the Government is doing this to protect the country’s reputation over cashing out to avoid being blacklisted by the UK but it has taken the most extreme standpoint and, passed as it is, it will cut the throat of New Zealand’s Qrops market.”
Reason says the clause should be replaced with a requirement for members to “adhere to the existing requirement that the principle purpose of a scheme is saving for retirement”.
He says: “In New Zealand, you can take 40 per cent of your fund before retirement and putting a similar rule in writing in relation to Qrops would stop the cashing-out business in its tracks.”
Global Qrops director Paul Davies says: “The cashingout problem has been overblown. What these schemes have been doing for the country commercially has been good but that was not taken into account when these rules were put together.”